The International Monetary Fund’s Executive Board has completed its Article IV consultation for the Kyrgyz Republic, concluding that very strong recent growth is being accompanied by overheating pressures that require tighter macroeconomic policy. Output is estimated to have grown by 11 percent in 2025, while inflation rose to 11 percent in March 2026, above the central bank’s 5–7 percent target range. The review projects growth to moderate as recent trade-related gains fade, with large infrastructure projects supporting activity, and expects the budget to move from surplus into deficit in 2026 as public wages and capital spending increase. Public debt remains sustainable, but financing needs are sizable. Directors called for stronger revenue mobilization and restraint on energy subsidies and wages, alongside better public financial, investment and debt management and fuller reporting of quasi-fiscal operations and state-owned enterprise risks, including those linked to the Stabilization Fund. They also supported keeping monetary policy tight and data dependent until inflation returns durably to target, strengthening central bank independence, allowing greater exchange rate flexibility, and tightening financial supervision in response to rapid credit growth, high nonperforming loans and a deepening bank-sovereign nexus. The assessment also pointed to the need for stronger AML/CFT controls and supervision of virtual asset service providers, as well as structural reforms to state-owned enterprises, competition, the business environment and economic statistics. The authorities need more time to consider whether to publish the staff report prepared for the consultation.

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